Calling out discrimination in banking bonuses
Via ILPA, questions have arisen regarding the Home Office’s understanding of EU law regarding self-sufficient EU citizens. The problem appears to be that the Home Office has asserted, at least in one recent decision, that:
The source of this rather surprising understanding of the EU Directive is a 2007 judgment of the AIT (before its elevation in status) by judges Storey and Grubb and is entitled AG  UKAIT 00075. Just before addressing the legal argument, I would note that this judgment is over seven years old now and there has been quite a lot of jurisprudence from the Court of Justice of the European Union (CJEU) on the subject. According to the European Communities Act 1972 (S 3(1) For the purposes of all legal proceedings any question as to the meaning or effect of any of the Treaties, or as to the validity, meaning or effect of any [F28EU instrument] F28, shall be treated as a question of law (and, if not referred to the European Court, be for determination as such in accordance with the principles laid down by and any relevant [F29 decision of [F30 the European Court] F30)], the decisions of the CJEU take precedence over national judgments and must be followed in so far as the matter is one within the scope of EU law.
Issue 1: When can the Non-EEA family member of an EU citizen residing in the UK take up work?
EU law is comprised of two types of provisions – those which have direct effect and those which do not. Any provision of EU law which has direct effect does not need to be transposed into national law. It has immediate effect and confers direct rights onto the beneficiary. Articles 20 and 21 TFEU on citizenship of the Union have direct effect (cf Zambrano). Similarly Article 45 TFEU (free movement of workers) has direct effect (2/74 Reyners  ECR 631). This means that any EU citizen who is moving and residing in any other Member State on the basis of his or her citizenship or for the purposes of taking employment or working, is doing so on the basis of a directly effective right in EU law. This right does not depend on any decision by the Home Office or any other UK authority.
The operative provisions of Directive 2004/38 also have direct effect, they may be relied upon by EU citizens and their third country national family members directly and are not subject to a requirement to fulfil national law as well. Thus the issue of a residence certificate or a residence card is only declaratory of the right exercised, it does not constitute it (41/74 Van Duyn  ECR 1337). Most EU citizens exercising Treaty rights in the UK do not bother to get residence certificates. Those who have third country national family members generally do so because otherwise their family members have trouble taking up employment as they have no document (residence card) which shows that they are entitled to do so. But it is a fundamental error of law to suggest that the right to take employment which is conferred by virtue of the Treaty and the Directive on the third country national family members of an EU citizen (other than a British national) exercising treaty rights in the UK is subject to any requirement to obtain a residence card. Article 25(1) Directive 2004/38 explicitly states: “Possession of a registration certificate as referred to in Article 8, of a document certifying permanent residence, of a certificate attesting submission of an application for a family member residence card, or a residence card or of a permanent residence card, may under no circumstances be made a precondition for the exercise of a right or the completion of an administrative formality, as entitlement to rights may be attested by any other means of proof.” (emphasis provided). This provision only codifies the jurisprudence of the CJEU over 30 years.
Article 23 Directive 2004/38 states: “irrespective of nationality, the family members of a Union citizen who have the right of residence or the right of permanent residence in a Member State shall be entitled to take up employment or self-employment there”.
Employers may require a third country national family member to obtain a residence card in order to shield themselves from the risk of employer sanctions for employing a person not entitled to work in the UK. But that does not change the entitlement of the family member to work, it only constitutes an obstacle to the family member persuading an employer to engage him or her. The employers’ position is the result of the way in which UK employer sanction legislation has been draft which leaves the employer potentially liable to prosecution even where the person it engages is entitled to work but does not have a specific document issued by the Home Office demonstrating this.
So far so good, third country national family members are entitled to work whether or not they have a residence card (or letter that they have applied for one) in the UK. But they have this right only if their EU national principal is exercising a treaty right of residence. So the question then is – when does an EU citizen have a right of residence in the UK? This again is very simple and codified in Directive 2004/38 in Articles 6, 7 and 16.
Article 6(1) covers the initial period: “Union citizens shall have the right of residence on the territory of another Member State for a period of up to three months without any conditions or any formalities other than the requirement to hold a valid identity card or passport.” (Article 6(2) extends this also to the third country national family members.) So from arrival in the UK the EU citizen exercises a right of residence for the first three months whether he or she is working or not. There are no conditions on this residence for the first three months. The person’s third country national family members, therefore, are entitled to work during this first three month period.
Article 7 Directive 2004/38 confirms that EU citizens have a right of residence after the three month period where they are workers, work seekers or self-employed persons or where they are self-sufficient. If they are relying on self-sufficiency, they must have sufficient resources not to be a burden on the social assistance system of the Member State but they only need to establish that they have the resources to the authorities if the UK authorities so request. As long as they have the resources they are exercising their residence right irrespective of whether the Home Office is aware of this or not (cf Article 25 above) (C-325/09 Dias 21 July 2011).
Thus, so long as the EU citizen has a right of residence, his or her third country national family members have the right to work in the UK. None of these people need any documentation from the Home Office to substantiate their situation in order for the third country national to be entitled to work in the UK. If the Home Office wants to check that an EU citizen and his or her family members do in fact fulfil the conditions it is for them to make inquiries. The UK is entitled to require third country national family members to apply for a residence card but the failure to do so can only be subject to proportionate and non-discriminatory sanctions “Failure to comply with the requirement to apply for a residence card may make the person concerned liable to proportionate and non-discriminatory sanctions.” (Article 9(3) Exactly what the comparator should be regarding the non-discrimination requirement is not entirely clear).
The AIT judges in AG from 2007, make the bizarre statement that the third country national spouse of a German national exercising his three months’ residence right under Article 6 Directive 2004/38 does not have a right to work (para 71). This is contrary to the expressing wording of Article 23 Directive 2004/38 which was not pleaded in the case and of which the judges appear to have been in blissful ignorance. Further, the judges go on to find that “It is a reasonable inference, therefore, that she had no lawful permission to work” after that three month period. Once again this is such an enormous misunderstanding of EU law and so completely contrary to the most basic of principles of EU law that it is astonishing that two judges with the experience which they have, would even contemplate such a statement. It disregards the fundamental nature of the direct effect of EU law and of the Directive rights. The lawful permission to work of the third country national spouse of the German national who was self-sufficient (because of her income – I will return to that question shortly) arises directly from the combine effect of the direct effect of Article 20 and 21 TFEU and Articles 6, 7 and 23 Directive 2004/38.
Issue 2: What income can be taken into account to determine self-sufficiency of an EU citizen?
This question has been dealt with by the CJEU on numerous occasions, from C-200/02 Chen  ECR I-9525 until and including C-86/12 Alokpa 10 October 2013. In Chen the self sufficiency of baby Chen was the result of income generated by her parents (primarily her father) in China. In Alokpa the CJEU clarified what it meant in Chen as follows: 27 “However, in the context of a case such as that at issue in the main proceedings, in which a Union citizen was born in the host Member State and had not made use of the right to free movement, the Court has held that the expression ‘have’ sufficient resources in a provision similar to Article 7(1)(b) of Directive 2004/38 must be interpreted as meaning that it suffices that such resources are available to the Union citizens, and that that provision lays down no requirement whatsoever as to their origin, since they could be provided, inter alia, by a national of a non-Member State, the parent of the citizens who are minor children at issue (see, to that effect, concerning European Union law instruments pre-dating that directive, Case C 200/02 Zhu and Chen  ECR I 9925, paragraphs 28 and 30).
This statement by the CJEU is quite clear – there is no requirement whatsoever regarding the origin of the resources on the basis of which an EU citizen may be self-sufficient. The AIT judges in AG misunderstood the CJEU statement in Chen (see para 76) assuming that the CJEU actually meant that the resources had to be acquired from the economic activity of the parents outside the host Member State. They also went on to misunderstand the CJEU’s decision (C-408/03 Commission v Belgium 23 March 2006) where it held that Belgium was not permitted to exclude income of a partner working in the host Member State for the purposes of assessing the adequacy of the individual’s self-sufficiency. The AIT judges assumed that the CJEU actually meant to state that this only applied where the partner was a national of the state and thus working in his home Member State according to national law (para 79). But this is not what the CJEU stated and as it made clear (once again) in Alokpa, there is no restriction on the source of the income.
The AIT judges further suggest that if, as they had (incorrectly) assumed, the third country national family member was working without authority, then the income from that unauthorised employment must be excluded as otherwise there would be an abuse of EU law. (para 81). They cited in favour of such a suggestion the CJEU judgment C-212/97 Centros  ECR I-1459. But this judgment is actually about whether two Danish nationals who set up a company in England in order to trade exclusively in Denmark expressly to avoid certain financial requirements in Denmark were excluded from the benefits of the EU right of establishment because they had committed an abuse. The CJEU found that they were entitled to use their right of establishment but that Denmark was also entitled to examine whether a fraud had been committed. This is such a completely different set of circumstances that it is hard to see where the judges find their support. Indeed, if there is to be an extrapolation from Centros to the AG situation, it would support the contrary position – the German national would be entitled to his self-sufficiency as his wife was working even if his wife were working in some dodgy manner (perhaps in breach of employment law) though the UK authorities would be entitled to check whether the wife’s work was fraudulent in some way.
In sum, the answer to the first question is: third country national family members of EU citizens exercising treaty rights in the UK are entitled by operation of the treaty and Article 23 Directive 2004/38 to take employment in the UK as soon as they arrive (with their EU national principal). They are entitled to continue to work so long as their EU national principal is exercising treaty rights.
The answer to the second question is: to assess whether an EU national is self-sufficient in the UK, he or she only needs to show that there are sufficient resources available. There are no requirements whatsoever as to their origin so these resources can equally be from the employment income of a spouse or other family member or from anyone else.
On both these (and other issues) the AIT judgment in AG has been overruled by the CJEU or decided in the absence of a consideration of key elements of EU law.
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